Indian ship-owners have managed to convince the government to let them hire foreign nationals to tide over the shortage of qualified senior officers. Shipping will now be the second transport sector after aviation to employ expatriates.
The government has decided in principle to allow shipping firms to hire two foreign nationals as officers on board an Indian ship, provided either the master or chief officer is an Indian national. Currently, only Indians holding continuous discharge certificates or seamen’s passport, issued by the maritime regulator Director General of Shipping, are allowed to work on Indian ships.
As a long-term solution to the manpower shortage, the Shipping Ministry is also raising the training requirements of companies that opt for tonnage tax — a tax based on the ship’s weight. Under the Tonnage Tax Act, a company is required to train one officer for every 10 complement (officers and crew) on board an Indian ship.
At a meeting called by Shipping Minister TR Baalu — and attended by the Director General of Shipping, Nautical Advisor and industry representatives — on January 9, the government decided to hike training commitments of shipping firms to three officers for every 20 complement on board an Indian ship under safe manning requirements. The complement on board an Indian ship varies from 12 to 24. It will also be mandatory now for Indian seafarers holding certificates of competency or qualification certificates issued by the regulator to work with an Indian shipping company for a minimum of three years.
The regulator is expected to formally issue orders to give effect to the decisions soon, according to a ministry official.
Not all the proposed changes have gone down well with the industry. While shippers are happy with the decision to allow foreign nationals in, they are unhappy with the call for additional training. Indian National Shipowners’ Association secretary general SS Kulkarni says the additional training will be difficult to implement. “There is no space on ships to accommodate more trainee officers.”
Apart from addressing the manpower shortage, allowing shippers to hire foreign nationals could also help them compete for better talent. "Hiring of foreign nationals will help us and also have a psychological impact,” says Shipping Corporation of India CMD S Hajara.
It is unclear if this will have a significant impact on the ability of shippers to retain Indian officers, though. Under income tax laws, Indians working on Indian ships in Indian territorial waters for 182 days or more in a year are considered Indian tax residents and liable to pay income tax. But Indians working on foreign flagships are exempt due to the tax department’s lack of administrative machinery to calculate their resident days. As a result, ships operating under non-Indian flags attract Indian officers with essentially tax-free salaries.
The Finance Ministry has already rejected an industry demand to treat Indians working aboard Indian ships on par with those on foreign ships and give them non-resident status under the Income Tax Act. As a result, the relaxation of hiring rules is a short-term fix, say shipping officials. “What is needed is a long-term strategy,” says Great Eastern Shipping Ltd general manager Rajat Dutta.
The manpower crunch is also affecting the growth plans of some firms. “The shortage of quality manpower has not only made it difficult to operate ships, it has also put the ship acquisition plans of companies in jeopardy,” says Varun Shipping MD Yudhishthir D Khatau.